Unilateral Actions the Case of International Environmental Problems

∂² NB₁ ∂² NB ₂
∂q₁ ∂a ∂q₁ q₂

Since q1 and q2 are strategic complements, i.e.

∂²NB2

------ > 0

∂q₁ q₂

The second term is positive, and we have that

∂q2        ∂²NB1

sign — = sign - ɔ ɔ .

∂a         ∂q₁ ∂a

And

•     ^d 7ι        ∙

sign — = -sign
∂θ₁

Changes in country 1’s costs, i.e. let a=c1.

Effect on q1.

∂q1       ∂²NB1

sign — = sign ɔ ɔ .

∂a       ∂q₁ ∂a

Evaluate

∂²NB1

——— = - q ₁ < 0, in our model.

∂q₁∂θ₁       ^{1     ,}

Hence,

42

<<   37   38   39   40   41   42   43   >>

More intriguing information